Key Insights for Navigating Coverage and Legal Precedents
Contributed by: Ashley Richards of Richards Advocacy
In the realm of insurance law, the interpretation of work performed exclusions has been a subject of significant legal scrutiny and evolution. This article delves into the intricacies of these exclusions, drawing insights from key legal cases and presentations, particularly focusing on the landmark Progressive Homes decision and subsequent developments.
Progressive Homes: A Turning Point
The Supreme Court of Canada’s 2010 decision in Progressive Homes marked a pivotal moment in Canadian insurance law. The court determined that faulty workmanship could be considered an “accident” or “occurrence,” thus potentially falling within the definition of “property damage” under a Commercial General Liability (CGL) policy. This was a novel interpretation, as previously, property damage was often viewed as damage to third-party property, not the contractor’s own work.
The case involved Progressive Homes; a general contractor sued for construction deficiencies in four condominium buildings. The insurer initially denied coverage, arguing that the claims did not constitute “property damage” or an “accident.” However, the court’s decision expanded the understanding of these terms, influencing numerous subsequent cases.
Exclusions and Their Interpretations
The Progressive Homes decision also addressed the interpretation of work performed exclusions. These exclusions typically preclude coverage for damage to the insured’s own work once completed. However, the court noted that modifications to standard exclusion clauses could grant broader coverage. For instance, exclusions might not apply to damage caused by a subcontractor’s work, highlighting the importance of precise policy wording.
Subsequent Case Law and Trends
Since Progressive Homes, Canadian courts have continued to refine the interpretation of work performed exclusions. Cases such as Ledcor Construction and GP Procleaners v. Gore Mutual have further explored the boundaries of these exclusions. In Ledcor, the court emphasized that excluding all damage resulting from faulty workmanship would undermine the purpose of builders’ risk policies.
The concept of “component parts” has also been a focal point. Courts have grappled with whether defective work can be divided into component parts, affecting the application of exclusions. For example, in Kelly Panteluck Construction, the court held that repetitive works of an identical nature could not be separated into component parts.
Conclusion
The interpretation of work performed exclusions remains a dynamic area of insurance law. The Progressive Homes decision set a precedent for broader coverage interpretations, influencing numerous cases and legal analyses. As case law continues to evolve, the precise wording of policy exclusions and the context of each claim will remain critical in determining coverage outcomes. Legal professionals and policyholders alike must stay informed of these developments to navigate the complexities of insurance coverage effectively.